The Freer the Trade, the Better Things Get

By Seton Motley, on April 5th, 2014

The West Wing was for several years a fabulous television show – about a Democrat White House. Yes, I know, I’m a conservative and I wasn’t supposed to like it. But great writing is great writing, and Aaron Sorkin can seriously write. (He doesn’t bat 1.000, but here he was stellar.)

For anyone who missed it – go watch the first three seasons. You’ll thoroughly enjoy it.

The show not only had great dialogue, it sometimes made outstanding political and policy points. Like when White House Communications Director Toby Ziegler (Richard Schiff) mocked anti-free trade college students, then delivered us the following:

You want the benefits of free trade? Food is cheaper….

Food is cheaper, clothes are cheaper, steel is cheaper, cars are cheaper, phone service

is cheaper….

It lowers prices, it raises income….

Free trade stops wars. And that’s it. Free trade stops wars. And we figure out a way to fix the rest.

All of which is indubitably true. Which brings us to the latest global trade deal possibility.

The West may not be on the verge of war with China – but there is certainly some tension there that free trade would help diffuse.

The 28-nation E(uropean) U(nion) committed for the first time to opening talks on a free-trade accord (FTA) if current negotiations on an “investment agreement” to improve business ties are successful….

Talk of a free-trade deal, which would create a market of almost 2 billion people, seemed unthinkable just a year ago, when Brussels prepared to levy punitive import duties on billions of dollars of Chinese solar panels, setting off the biggest ever trade dispute between the two partners.

Trade barriers could potentially harm poor countries’ access to rich countries’ markets. Some of these countries worry about a planned free-trade zone between the US and the EU, which they fear will shut them out.

Trade barriers are the problem. And look – Toby Ziegler was right.

By creating the largest free-trade zone with 800 million consumers, world per capita income is expected to rise by more than 3 percent….

That is a statistical average that would, however, have very different regional effects, Thiess Petersen of the Bertelsmann Foundation said. “The US and Europe would benefit greatly. But there would be drawbacks for the rest of the world.”

Get that? The two parties freely trading benefit – the ones that aren’t don’t. So get rid of the trade barriers.

If the transatlantic trade agreement only eliminated customs duties, the impact on transatlantic trade relations would be relatively small because duties in most regions are already very low.

The second variant would thus make more sense: reducing not only tariffs but also so-called non-tariff barriers to trade.